The Profit Margin: December 8, 2025
Statistic of the Week
In the coming decades, it is estimated that more than $90 trillion in assets will be transferred from the Baby Boomer and Silent Generations to Gen X and Millennials. Baby Boomers tend to own significantly more “stuff” than their children, which adds complexity to this wealth transfer. Collections of baseball cards, model trains, coins, silver, and other valuables must be sorted, valued, and passed along as well. This dynamic is fueling the growth of a new, “generational decluttering” industry.
Global Perspective
The German auto industry has struggled to fully transition its vehicle fleets to all-electric models. As a result, Germany’s chancellor, Friedrich Merz, has asked the European Union to carve out an exemption for plug-in hybrids and highly efficient gasoline-powered vehicles from the EU’s planned ban on combustion engines slated for 2035.
Market Moving Events
Tuesday: JOLTS (October)
Wednesday: FOMC Rate Decision, Fed Chair Press Conference
Thursday: Jobless Claims, Trade Deficit
Commentary
Equity investors reaffirmed their bullish outlook as we entered the final month of the year. All three major domestic equity indices posted gains last week. The Nasdaq recorded its second consecutive weekly increase, rising 0.91%.1 The Dow Jones Industrial Average advanced 0.50%,2 while the more broadly diversified S&P 500 trailed slightly, gaining 0.31%.3 Special attention should be paid to the fixed income markets last week. The 10-year Treasury yield rose by 0.12%, ending Friday at 4.14%. It marked the worst weekly performance for the 10-year Treasury since April, while the 30-year Treasury experienced its worst week since May.4
What drove last week’s increase in fixed income market volatility? We believe the upcoming FOMC meeting played a significant role. Currently, markets are assigning an 87% probability to a rate cut that would lower the benchmark federal funds rate from a range of 3.75%–4.00% to 3.50%–3.75%.5 If enacted, this would mark the lowest benchmark rate since the fall of 2022.6 The Fed will be making this decision with less data than it would normally prefer. Due to the federal government shutdown, the most recent labor market and inflation reports are unavailable. Economists generally agree that inflation—while still above the Fed’s target—is running at a moderate level near 3%, and that the labor market is softening but not at an alarming pace. This uncertainty around inflation, employment, and the pace of future rate cuts in 2026 has contributed to volatility across the fixed income landscape. In an otherwise quiet week for economic data and earnings, the Fed is firmly in the spotlight.
Chart of the Week
The Institute for Supply Management released its latest economic activity indices last week for both the manufacturing (dark blue) and services (gold) sectors. The services reading surprised to the upside, while manufacturing once again fell short of expectations.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week:
Clearnomics,
Institute for Supply Management
Statistic of the Week:
Bloomberg Business
Global Perspective:
The Economist
Commentary:
1. Bloomberg, Investor’s Business Daily
2. Bloomberg
3. Bloomberg
4. MarketWatch.com
5. Barron’s
6. Investor’s Business Daily